Advancing Entrepreneurship in Memphis

Taking a business idea to reality takes a lot of hard work and often help from others. More than ever in Memphis, the “others” can be found in the form of entrepreneurial incubators at Start Co. and the Memphis Bioworks Foundation.

Start Co.

When the FedEx Institute of Technology opened in 2003 at the University of Memphis, Eric Mathews became its director for research and development. It was during his time there that Mathews began to see a need for entrepreneurship in the community.

“We needed the jobs of tomorrow here,” he said. “Looking at the landscape – and the FedEx Institute was high profile – we saw there were individual organizations trying to tackle this. … You could count the number of startups on one hand at that time.”

Memphis had a startup landscape at the time, but it wasn’t strong. And much of the investment that did take place occurred outside of Memphis.

So on Sept. 1, 2006, Mathews left the FedEx Institute of Technology to embark on a journey to “walk through the startup valley of death” with the formation of Start Co. The first five years brought plenty of failure of false startups. But then five years ago outside investors began to believe in the potential in Memphis.

Taking responsibility for what the local ecosystem for entrepreneurs looks like has been an important part of the change, Mathews said. Creating an environment where entrepreneurs feel they can take risks also is important.

Start Co. uses a variety of accelerators that are billed as part bootcamp and part summer camp. The accelerators – Seed Hatchery, Sky High and Upstart – take a business from seed-stage to funding and launch. These programs are operated at Start Co., creating a density of sorts in the Downtown core.

It’s been a process, to be sure, but one that is bringing results.

“I’m not saying we’re in the promise land but we do have people move from all over the world and they want to stay here,” Mathews said. “We’re chipping away at it. When you first start out and there are no startup weekends or programming, no support from the business side and tech support perspective, you eat the elephant one bite at a time.”

Memphis does face challenges as an entrepreneurial community. Disparities of household net worth in the community and low minority participation in high-tech jobs are barriers to overcome.

“You can get people through but we don’t have the right volume,” Mathews said, adding that an assessment in 2012 found 130 ideas generated but only about three to five were worthy of real material investment. “If you want to build the jobs of tomorrow you can’t do it three to five at a time. You have to do 50. So we have to cultivate thousands of ideas.”

Thousands of hours are invested in business ideas, many of which never get through the early stages. But Mathews said those hours aren’t wasted. In fact, he said the skills learned through the incubation process often help individuals who end up in the community’s government offices and nonprofit organizations.

Mathews said Start Co. isn’t even scratching the surface of what’s possible. There needs to be the availability of larger venture capital pools. Eventually these startups will need new employees, which will cause a talent crunch to overcome.

“I’ve always viewed this as a 20-year problem to get a true point of vibrancy and sustainability,” he said. “What does it look like halfway done? It’s five years of failure and false starts and scar tissues and testing and trying to figure out if it will have power in the community. And then the next five-year period is about reducing practice, what works and having infrastructure that can build entrepreneurs. We can repeatedly take people with raw talent and get them to the point they can raise their own money. They’re not quite ready for prime time but incubate them ahead. The next five years are about pouring gasoline on what works and filling in the gaps.”

The final five years of that 20-year plan will be about getting to a point of sustainability. That’s when the current teams will be at a point of becoming the next generation of angel investors.

Memphis Bioworks Foundation

The Memphis Bioworks Foundation was formed in 2001 by a group of business leaders who identified the areas around bioscience as a core strategy in the region. In those early days, Executive Director Dr. Steve Bares said the organization realized it needed to concentrate on its strengths, which align with those of Memphis: biomedical, bio-agriculture and logistics.

“We set out early on to recognize you won’t recruit yourself into that business, you have to grow it,” Bares said. “It was organic growth strategy that we’ve been implementing.”

There was skepticism, particularly about if Memphis as a community could be world class in life sciences. But Bares said it was important 15 years ago – and now – to focus on the city’s strengths, from the oncology research at St. Jude Children’s Research Hospital to the education opportunities at the University of Tennessee Health Science Center and a large industry base of medical device companies.

In the early years the Bioworks Foundation spent its time convincing the Memphis area the work could be done. Now, Bares said, no one questions if Memphis is in that business. Now it’s how to optimize and grow.

Memphis Bioworks offers incubator space and resources, business accelerator programs and investment. The focus is on ideas, innovations and technologies in logistics, health care, bioscience and agriculture.

Bioworks has more than 34,000 square feet of office space, wet labs and support equipment for biotech and clean-tech start-up companies in the Bioworks Business Incubator.

“No one had done that,” Bares said. “We didn’t think it made sense to build what’s great in California. Seventy-five percent of companies we get come from outside Memphis. We had some companies that turn down Bay area accelerators to come to Memphis. It’s really unique.”

A more developed ecosystem means companies are forming and staying in the city.

“We want to encourage local companies but if you put an accelerator together and five of six applicants are from outside the area you proceed,” Bares said. “And they end up sticking around. They’re now staying and hiring employees. Our core assets are built so we can begin to leverage that and compete nationally and globally.”

Today, medical device companies find a welcoming and supportive market. If someone has an idea in orthopedics everything that’s necessary to put a deal together rapidly now exists in Memphis, from incubators and accelerators to regulatory support and patent support.

Bares is pleased with how far things have come over the past 15 years, but he knows there is much progress still to be made.

“We can admire how far we’ve come or talk about how far we have yet to go,” he said. “Both are true. In 2001 we pointed at Mt. Everest and said let’s climb it. I’m at Base Camp Two. We have assets and we’re generating things but in terms of potential we need to unlock that core culture of the city that is very entrepreneurial.”